Why Big Tech earnings could be in trouble this season
Investors will get several earnings reports from megacap companies this season that could leave a lot to be desired. Tesla is set to report after the close on Tuesday, while Google-parent Alphabet’s figures are slated for release Thursday. Microsoft’s and Apple’s reports are due next week, along with Amazon . Megacap names have driven S & P 500 earnings growth in recent years — as enthusiasm around artificial intelligence drove their bottom lines. This season, however, results from these companies could be lackluster. “Digging a little deeper, it’s worth noting that the rate of upward revisions no longer favors the top 10 market cap names relative to the rest of the S & P 500, suggesting that there has been some significant erosion of the earnings case for the mega cap growth names,” wrote Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. Earnings trouble for megacaps could not have come at a worse time for U.S. markets. The S & P 500 is down 9% since April 2, when President Donald Trump announced a slew of hefty tariffs on imported products. Many of those levies were later halted for 90 days, but goods from China were not part of those. .SPX mountain 2025-04-01 S & P 500 in April On top of that, Trump has ramped up attacks on Federal Reserve Chair Jerome Powell . The president said Powell was a “major loser” in a Truth Social post Monday that called for the central bank chief to lower rates immediately. This raised questions among investors worldwide about whether the Fed can remain independent. Calvasina also pointed to another problem with earnings: Revisions are falling for companies outside of megacaps. “The return of downward revisions has been fairly broadbased. No sector within the S & P 500 has been seeing upward revisions to both EPS and sales forecasts recently,” she said. Bottom line: It could be a tough earnings season, particularly for megacap companies. Elsewhere Tuesday morning on Wall Street, Bernstein downgraded eBay to market perform from outperform, citing tariff pressures. “China-sourced inventory has been a core area of growth (e.g., Motor P & A), and the channel could see disruption until tariff policies get finalized. Offsets would be alternative sellers and secondhand [gross merchandise volume] that may accelerate, but EBAY’s category mix broadly skews discretionary,” analyst Nikhil Devnani wrote to clients on Tuesday. “Too many moving parts, which makes us less comfortable with an active call.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
